SOVEREIGN fund Khazanah Nasional Bhd’s strategy of divesting non-core assets continues with a plan to sell a stake in Cenviro Sdn Bhd, and UEM Edgenta Bhd, Taliworks Corp Bhd and Singaporean firm Blue Planet Environmental Solutions Pte Ltd are among the potential contenders eyeing the waste management company, according to sources familiar with the matter.

Khazanah took over the entire stake in Cenviro from UEM Group on March 28, 2014. The restructuring formed part of the fund’s sustainable development initiative in alignment with the 10th Malaysia Plan and Economic Transformation Programme, while Cenviro expanded its core business under Khazanah after undergoing a corporate restructuring and rebranding exercise.

According to Cenviro’s website, Khazanah took over the entire stake in the company from UEM Group on March 28, 2014. Cenviro, through its subsidiary Kualiti Alam Sdn Bhd, owns and operates Malaysia’s first integrated toxic and hazardous scheduled waste management centre in Port Dickson, Negeri Sembilan, which has been in operation since 1998.

Queried by The Edge on the matter, Khazanah says: “We are in a closed process to potentially divest a stake to a party that meets our preferred partner criteria. As the process is ongoing and non-disclosure agreements are in place, further disclosures will be made at the appropriate time.”

Meanwhile, the potential contenders either were non-committal or denied knowledge of the matter when asked. “We are unable to provide any comments,” says UEM Edgenta in an emailed response to queries from The Edge.

Water treatment, toll concessionaire, construction and engineering company Taliworks denies any knowledge of the matter, saying it “is not in talks with Khazanah on acquiring a stake in Cenviro Sdn Bhd and is, as a matter of fact, not aware that Khazanah is divesting their stake in Cenviro”.

Blue Planet, in which OSK Ventures International Bhd (OSKVI) has a strategic investment of an undisclosed amount, did not respond to questions from The Edge.

Blue Planet is a Singapore-based regional waste management company that focuses on technology-driven end-to-end waste solutions such as solutions to convert thin-film plastic waste into commercial-use diesel and processing municipal grade organic waste into compost and biogas.

Earlier news reports showed that Covid-19 clinical waste accounted for 27.8% of total clinical wastes collected by UEM Edgenta’s wholly-owned healthcare support services unit, Edgenta Mediserve Sdn Bhd (EMSB) in April 2020. Under the current concession agreement, EMSB manages clinical waste from 33 government hospitals as well as nine health clinics in the northern region of Peninsular Malaysia, 12 private hospitals, 694 private clinics and 83 Ministry of Defence clinics nationwide.

Cenviro also reportedly said its wholly-owned waste management unit Kualiti Alam indicated that the Covid-19 waste it had collected from private healthcare facilities had increased in volume.

As UEM Edgenta’s EMSB is a Ministry of Health (MoH)-appointed concessionaire to manage clinical waste from public medical facilities, it makes sense for the asset management and infrastructure solutions entity to secure Cenviro for its portfolio.

Meanwhile, Taliworks has an existing waste management arm via a 35% equity interest in SWM Environment Holdings Sdn Bhd (SWMEH), a waste management and public cleansing service provider in Johor, Negeri Sembilan and Melaka. SWMEH owns SWM Environment Sdn Bhd, the concession owner for the provision of solid waste collection and public cleansing services to those states until Aug 31, 2033.

Company search data on Cenviro shows that it returned to the black with a net profit of RM37 million in the financial year ended Dec 31, 2019, from a net loss of RM3.28 million the year before, on the back of revenues of RM219.86 million and RM253 million. The company recorded net profits of RM78.96 million, RM75.57 million and RM46.2 million from FY2015 to FY2017 respectively.

Khazanah’s ongoing divestment exercise to offload “non-critical, non-strategic” assets, which started when the Pakatan Harapan government came into power in 2018, has seen the divestment of its entire 100% interest in SilTerra Malaysia Sdn Bhd to Dagang Nexchange Bhd and China’s CGP Fund on July 26 and 16% in IHH Healthcare Bhd to Mitsui & Co Ltd in October 2019 for RM273 million and RM8 billion respectively, among others.

Khazanah also divested a portion of its stake in Chinese e-commerce giant Alibaba Group Holding Ltd worth RM2.2 billion.

Khazanah’s foreign divestments included the sale of stakes in BDO Unibank Inc (worth RM1.56 billion), Farfetch.com Ltd (RM771 million), SEA Ltd (RM612 million), Infosys Ltd (RM201 million), PT Charoen Pokphand Indonesia Tbk (RM196 million) and a partial stake sale in Titan Industries Ltd (RM89 million).